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Plan Advisors Need Plan Data to Do Their Job

  • March 11, 2017


Give Your Plan Review New Life!

Everyone’s take on retirement savings and investments is a bit different. I mean, if all advisors agreed on just one way to do things, there would be no need for advisors because plan sponsors could do it themselves. They hire you – their trusted advisor – because of your knowledge and expertise.

How do you become the trusted advisor in the eyes of your clients?

The plan review is at the core of the relationship between you and your clients. You conduct reviews to best understand a client’s needs, offer them advice, make changes to their account, and educate them on what is happening as you help them set goals and benchmarks.

The real value of your evaluation service is the ability to show momentum; and show it more frequently than annually – setting and monitoring goals is the way. In the challenge to protect and grow your business, you need to take advantage of momentous events, or address setbacks, when you know them. Once goals are established, you can show progress, measure success and prove your advice. This is key: your actions and results are evidence that your services are helping the plan climb towards the goals you have set (or, possibly, exceed!). Conducting dynamic plan assessments is central to being the trusted advisor.

How do your plans measure up?

To evaluate and report on plans, the first thing we need to consider is plan health. Essentially plan health is the backbone of plan evaluation. Are you able to be concise and focus on the critical issues of the plan? How easily can you analyze the plan data and convert to effective decision making? To date, plan health checks have been cumbersome and laborious to produce; and look and feel like a static report.

Do you have a way to quickly call up, assesses and interactively discuss plan metrics in a meaningful way to your sponsor – a sponsor that can’t give you 15 minutes of time and does not understand your language? Can you easily get through the basic metrics?

  • Deferral rates
  • Contribution levels
  • Account balances
  • Participation rates
  • Participant ages
  • Loan balances
  • Leakage
  • Investment performance
  • Plan fees
  • Plan performance

Unless you are using a tool like Fluent’s UtopiaAdvisor, the answer is no. You need an interactive, smart way to use integrated data that provides real-time delivery of plan and investment information. You need to show progress and demonstrate the effectiveness of your decisions.

Are you assuring participants’ retirement readiness?

Think about how you present retirement readiness to your clients. Do you simply show industry statistics and a line graph of expected retirement savings based on information available today? Or, do you do a deeper demographics analysis of what participants need to plan for the future, and what they truly need in plan services to help them retire?

As participants have variables in savings commitments, resulting in up and down income projections, identifying the gaps helps identify where replacement recommendations (catch up ratios) need to be applied. A plan health check with retirement readiness helps identify the impact of services and the up or down activity of savings, so you can act and be complete in your value.

Do you have a plan scoring system available?

When considering a sponsor’s plan, can you see a score of the plan based on important criteria within the just plan? Are you brave enough to show it, be transparent and have an honest conversation? Consider the above metrics and use the plan score to objectively compare and justify changes to the plan design. Use it as a reference for your discussions (and a check as to how you are doing!)

Plan sponsors want their advisor to be honest with them, and an objective scoring and benchmark reference tells them if they are making the right decisions and what actions need to be taken in cases of digression.

Do you have benchmarking available for goals & metrics?

Measuring plans and outcomes should only be done objectively. In addition to scoring, the best way to present this is by using well-defined standards, goals and relative benchmark resources. This is where plan benchmarking (or comparing to an index of peer group plans) is vital. The good news is that if your score is not great, or you are not meeting the benchmark, you can at least show momentum towards your goals.

For example, say you want to improve your participation rate by 2%, but the industry benchmark is 5%. The benchmark score will decrease even if you hit your goal, because it’s reflecting that your goals are too conservative.

Benchmarking will help you set realistic goals and give you a bigger picture of the plan’s health.

In today’s world, what is the role of the advisor?

We all understand the role of an advisor is changing. At Fluent, we want to ensure that you have all the tools you need to be successful in your practice. When looking at your technology choices, ask if plan health, retirement readiness, plan scoring and plan benchmarking are included, and how well do they integrate with investment review tools? Do they represent the digital age to answer client expectation with real-time information, so you can transform your practice?

You need to WOW your clients who don’t have time to wade through a lot of information and leaf through reports. Using a tool like UtopiaAdvisor allows you to have all the information you need for a meaningful, engaging plan review at your fingertips.

Learn more about Fluent Technologies’ UtopiaAdvisor. Come to booth #437 at the NAPA 401k SUMMIT or visit our UtopiaAdvisor page

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